The utilisation of trusts for asset protection, estate planning and tax planning purposes has exploded over the last 20 years. I suspect many readers are currently trustees of trusts. I equally suspect that very few readers have read the Trustee Act 1956, which was essentially the legislative rule book for trustee obligations.

If you have had the misfortune to read this 60-year-old piece of legislation you would realise that it is nearly impenetrable in its complexity and likely left you none the wiser as to what your trustee obligations are.

On 30 July 2019, Parliament’s solution to this lack of a coherent, readable rulebook for trusts received royal assent in the form of the Trusts Act 2019. This is designed to be a one-stop shop for trustees and beneficiaries in terms of their obligations and entitlements. While in large part this new legislation merely repackages existing statute and common law principles that are fairly well known, there are some changes that those of you who are trustees of existing trusts, or those of you who may become trustees of trusts in the future, should be aware of.

In particular, the following points are worthy of note:

•While the Act passed on 30 July 2019, it does not become effective law until 30 January 2021. This provides an 18-month transition period for trustees of existing trusts to ensure that their house is in order.

•The maximum life of a trust is to be extended to 125 years. At present it is 80 years.

•Trustees will be obligated to provide more information to beneficiaries – starting with notification that they are beneficiaries of the trust. In addition, beneficiaries should be advised of who the trustees are, when trustee changes occur, and the fact that they have a right to request information regarding the trust.

•Trustees must provide “trust information” on request, which is “any information regarding the terms of the trust, the administration of the trust, or the trust property, that is reasonably necessary for the beneficiary to have to enable the trust to be enforced, but does not include reasons for trustees’ decisions”. This is fairly broad and would likely extend to financial statements, details of assets held, trustee resolutions and amendment documents.

•Having said that, there are exceptions to these obligations, including consideration of the potential impact that disclosure of information may have on the trustees and the beneficiaries, the age and circumstances of the beneficiary and a myriad of other factors.

•There is a lengthy list of documents that trustees must maintain, noting that if there is more than one trustee it is possible for one trustee to hold the documents on behalf of the other trustees provided that copies can be made available.

•There is a prohibition on trustees contracting out of liability or receiving an indemnity from the trust for breaches of trust due to dishonesty, wilful misconduct or gross negligence.

•There are obligations on advisers to draw the existence of indemnity clauses to the attention of settlors when providing advice in relation to trusts or setting them up.

In summary, for the most part it is business as usual, as the new Act largely codifies what was common practice already. However, there is no doubt that the obligations of trustees are ramped up under this Act, particularly with regard to disclosing information to beneficiaries. As a result of this, some trustees may reconsider whether they want to remain trustees of trusts and furthermore, it is an opportune time right now to review trust deeds. We recommend you engage with your trust professional or contact the trustee team at GRA for advice: 09 522 7955, info@gra.co.nz or via our website.